Waiting for the announcement of the new National Automotive Policy (NAP) is a bit like waiting for the next installment of the Fast and Furious. You know it’s going to be bad but you still want to watch it.
Although the automotive industry already knows what to expect – more of the same old, a lot of lofty goals but lacking in details. However professional managers are obligated to make decisions based on data and official sources of information, so car companies will still need to wait for an official announcement by the government before proceeding with their plans.
The 2020 National Automotive Policy has just been announced this morning and it’s everything the industry has expected. At least the industry can now move on.
As expected, NAP 2020’s policy paper is peppered with buzzwords: NxGV for next generation vehicles, IR4.0 for Industrial Revolution 4.0, AACV for Automated, Autonomous and Connected Vehicles, lightweight material technology, hybrid, electric and fuel cell vehicles
None of it mean much as there is still not enough details on implementation plans and how is the government going to bridge the huge chasm between the reality on the ground and these lofty ideals.
Talks about IR.40 and Internet of Things (IoT) and electrification can make one appear to be intelligent but which manufacturer sees any logic in increasing automation on low volume plants like those in Malaysia? Remember that a car plant needs to produce around 200,000 cars a year to run most efficiently, and in Malaysia only Perodua can reach that volume.
Exports are a nice idea but while Malaysia dragged its feet over the last 5 years about the longer term direction for EEV, all the biggest car manufacturers in the region have moved on to build/expand plants in Thailand, Indonesia, and even Vietnam.
It doesn’t make sense for these manufacturers to duplicate the same for Malaysia because the facilities planned for Thailand and Indonesia are meant to serve export markets as well.
Hyundai is building an EV plant in Indonesia, Toyota, BMW, and Mercedes-Benz have recently completed their electric/plug-in hybrid vehicle battery plants in Thailand. So where does this leave Malaysia’s ambition to be the region’s hub for electrified vehicles, IR4.0 and whatever buzzword you fancy.
On the topic of continuity of incentives for EEVs. NAP 2020 remains as vague as previous ones. The policy paper merely says “customised incentives mechanism will be continued based on cost benefit analysis of specific business proposals by investors.”
It still doesn’t give a clear answer as to until when will these incentives expire? Without a minimum five years commitment to maintain policy stability, it’s difficult for car companies to plan their products line-up and investments.
Accompanying the NAP 2020 policy paper is a list of targets to be achieved by 2030. Among the targets are:
The latest 2020 NAP is the fourth of its kind. The first NAP was announced in 2006 and among the targets set was the abolishment of APs for imported vehicles by 2010.
This was not followed through, as the 2009 NAP postponed the abolishment to 31 December 2015 for Open APs (used for reconditioned cars) and 31 December 2020 for franchised APs (used for new cars). Both targets were later rescinded following complaints by the association of reconditioned cars dealers PEKEMA.
The third NAP, announced in 2014 was the most successful. It was drafted by the Malaysia Automotive Institute (MAI, now known as MARii) and saw the introduction of fuel economy standards and tax incentives for EEV (Energy Efficient Vehicles), not to be confused with EVs (electric vehicles).
There were some criticisms of lack of transparency but it propelled Malaysia to be the leader in hybrid and plug-in hybrid vehicles for the region, for a while at least. Thailand and Indonesia have since overtaken us.
Until Thailand caught up, Malaysia was among the top-3 markets in the world for BMW plug-in hybrids but we are still the only country outside of Japan to locally produce Honda range of i-DCD Sport Hybrid models (City Hybrid, Jazz Hybrid, HR-V Hybrid).
That 2014 NAP was reviewed on June 2018 but following a change in government, updates to the new policy has been delayed until today.
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